Palestinian Power Firm Cancels Natural Gas Deal With Israel

Drilling at the Leviathan natural gas field off the Mediterranean shore. Credit: Courtesy Albatross

Tova Cohen

Published on 11.03.2015

Published on 11.03.2015

REUTERS - The Palestine Power Generation Company (PPGC) has cancelled a deal to buy about $1.2 billion of natural gas from the Leviathan field off Israel citing delays in development of the giant project.

Development of Leviathan have been thrown into doubt after Israel's competition regulator recommended in December the break-up of what it says is monopoly control of the country's offshore gas reserves by Noble Energy and Delek Group , which hold 85 percent of Leviathan.

In 2014, PPGC signed a 20-year deal to buy up to 4.75 billion cubic metres (bcm) of gas once Leviathan starts production later in the decade.

PPGC said certain conditions had not been met, including failure to secure approval from the anti-trust authority as well as other regulatory approvals. It also cited delays in development of the project, Delek Drilling, a partner in the field, said.

The cancellation will take effect in 30 days, unless anti-trust approval is secured before then, Delek said.

The largest offshore gas discovery for a decade, Leviathan has estimated reserves of 22 trillion cubic feet (622 bcm). Production had been expected to begin in 2018 following an initial investment of around $6.5 billion.